Muskegon Heights schools in trouble with IRS for reporting failure

Chronicle file photoThe administration of former Muskegon Heights Superintendent Dana Bryant, left, failed to file Internal Revenue Service reports for more than a year, an oversight that could result in fines and penalties against the school district.

A visit by an IRS agent last week drove home the point that troubles in Muskegon Heights Public Schools aren’t confined to out-of-control spending.

The agent visited the offices of the Muskegon Area Intermediate School District, which now is handling the books and overseeing administration of the troubled school district, hours before MAISD Superintendent Dave Sipka appeared before parents and staff of Muskegon Heights during a public forum Wednesday.

The Internal Revenue Service agent told Sipka that Heights officials for more than a year had not been filing federal income tax statements. Surprised, Sipka said he assured the IRS that the MAISD would look into it.

“It’s one of the fixes the ISD is having to take care of,” Sipka said. “We’re just finding out a variety of things that weren’t done for whatever reason.”

Former Muskegon Heights officials did not submit the last five quarterly 941 forms. Employers are required to use the forms to report such information as the amount of federal income, Social Security and Medicare taxes that were withheld from employees’ paychecks.

Failing to file the forms can result in fines and “other consequences,” Sipka said.

“You can’t do that,” Sipka said of the apparent oversight. “It’s a business no-no.”

Dave Sipka

Sipka said it appears the district was paying federal taxes. However, a list of overdue bills shows the district hadn’t been paying state unemployment taxes and owed more than $162,000.

The IRS agent’s visit was one more thing for Sipka, who was obligated to step in as interim superintendent at Muskegon Heights, to deal with.

Sipka became the district’s interim superintendent at the end of December when former Superintendent Dana Bryant retired.

Since then, Sipka and MAISD Deputy Superintendent Marios Demetriou have been trying to hold off creditors, deal with a school utility shut-off notice, satisfy state requirements to eliminate the district’s debt, negotiate concessions with staff, cajole the state to keep per-pupil aid flowing, recommend cost-saving measures to the school board and deal with serious facility needs.